Is Bush serving the national interest?

February 7, 2005 Bush's State of the Union speech outmatched his inaugural speech. It embraced necessary domestic reforms in tort law, the tax code, health costs, etc., though it neglected the trade deficit and the implications of a lower dollar. In contrast to what the President stated, Social Security will not be bankrupt by 2040 or so, but does need reform, and the President proposed many. Liberty and freedom assumed unusual prominence in both speeches. In fact, they assumed mystical auras in domestic events and even more mystical qualities in relation to foreign policy. While the inaugural speech made no reference to terrorism and only used the term "tyranny," terrorism and tyranny were both mentioned in the last speech. To remove them and to enact freedom, so Bush assures us, will bring peace and prosperity. The inaugural speech placed the priority on foreign policy over domestic policy. In the State of the Union speech, this was reversed. In a strange but subtle way, both speeches, though, continued what the pundits have missed, namely: the process of eroding citizenship based on a nation. Though the President is no fan of the French, his speeches, ironically, continued what was begun by the French in 1830. To assure imperial control over Algeria, France created the French Foreign Legion. It accepted foreigners, without questions, as long as they were willing to fight for France's colonial interests. For those who joined, loyalty to one's country of origin, of which one was a citizen, was overshadowed by loyalty to a military bureaucracy. What was implied was the erosion of citizenship based on a nation. The Nazi elite fighting force, the "Waffen SS," picked up what the French had started and expanded the dismantling of citizenship of a nation when, by the end of World War II, more than half of its 450,000 members were foreigners, including many thousands from Norway and Holland and, oddly enough, even 600 from neutral Switzerland. Racism and ideology assumed priority. Those who joined voluntarily violated their citizenships and replaced loyalty to and citizenship of their nation with loyalty to an ideology and a foreign military bureaucracy. The process of eroding citizenship is also implied, if not increasingly expanded, not only in Bush's speeches but also in such diverse actions as coaches recruiting abroad as well as bureaucracies engaging in global hiring and marketing. In a microfashion, it even surfaced in a recent speech given by Thomas Barnett, a professor at the Naval War College, when he showed little concern for illegal immigrants breaking the law, i.e. laws designed to serve the citizens of a nation, since many of them, so he stated, would join the Navy anyway. Loyalty to a military bureaucracy takes precedence to serving the national interest. It resembles somewhat Bush's indifference to protecting the borders and actually tolerating, if not encouraging, what is happening at America's borders. Bureaucratic and political interests prevail here, and they also prevail when it comes to recruiting, marketing and shifting employees globally without any restraint of national citizenship and laws that apply to a national territory. While globalization has some advantages, it does clash notably with national interests. Loyalty to a military, corporate, religious, sports bureaucracy, etc. takes precedence over citizenship of a nation, its laws and the national interests. Cynics could advocate an American Foreign Legion to do the work that Bush has in mind. It would be far cheaper. Besides this, Bush's speeches also grafted tremendously on Wilsonian principles. They recall Wilson's justification of entering World War I to make the world safe for democracy and to end all wars. In fact, they revitalize, update and expand Wilsonian notions in order to rid the world of terrorism and to bring liberty and democracy to every country around the globe and, in particular, the Mideast. In many ways, this is a commendable objective. Wilson stated that we did not just create the nation to serve us, but we created it to serve mankind, i.e. everyone. By its very nature, this subordinated the national interest to global idealism. In the 1960s, Kennedy added his own twist to Wilsonism when he stated that we will bear any burden, pay any price to assure liberty around the world. Such grandiose notions beg the question of how high a cost the country is willing to bear and to what extent such policies and costs will deprive Americans of their liberty in order to assure the uncertain success of a fanciful notion around the globe. In compliance with Wilson's desire, democracy did spread and females received the vote in many nations, just as they did recently in Iraq and Afghanistan. But those post-World War I democracies too often moved democratically toward one party authoritarian governments. This fact could show up again when the democratic elections in Iraq and other nations could favor fundamentalist religious factions and/or anti-American policies. If so, Bush's foreign policy may become tarnished by a modified repeat of post-World War I historical ironies.

What Bush and senior economic advisors don't tell you about the economy

January 25, 2006 Recently, Glenn Hubbard, Alan Greenspan and Ben Bernanke, current and former senior economic advisors to President Bush, all agreed with Bush's constant refrain that the economy is growing at a high rate. For them, it is the envy of the world. Labor mobility and flexibility, high productivity increases and innovative credit and financial institutions and policies, so they are telling us, reduce and manage risk and allocate resources efficiently to make us all richer. Last year, the GDP grew by 3.6 percent, in sharp contrast to the modest l.6 percent or so of other advanced economies. Unemployment is down to 4.9 percent. These are the favorite statistics of the administration. We are all getting wealthier, so Bush keeps telling us and, no doubt, will tell us again in the upcoming State of the Union address. Unfortunately, the following facts and statistics tell an entirely different story. They show an unadmitted and continuing relative economic decline of the majority of Americans. They are the ones Bush should address in his State of the Union speech, and they are the ones that should be used for policy formulation: --- Much of the touted GDP growth is due to domestic population growth plus legal and illegal immigration, unlike other advanced economies which have a stable, if not declining, population. Adjusted for this, the U.S. GDP growth would also be modest. In U.S. economic history, population growth has always been unjustifiably associated with people getting wealthier. ---The U.S. has a significantly higher percentage of adult participation in the labor force whose members, on average, are now working more than two months longer each year than cohorts in advanced economies. Over a lifetime this adds up to working eight years more than workers in the European Union. ---Average wages fell behind the inflation rate last year by about 0.4 percentage points and by a shocking 1.1 percentage points in 2004, proving that impoverishment is indeed continuing, as it has for decades. In the EU, average wages kept up with inflation in '05 and in '04 fell behind far less than in the U.S. ---High productivity increases, while impressive, relate largely to the manufacturing and agricultural sectors which employ far less than 20 percent of the labor force. Few would argue that the service sectors composed of education, electioneering, legal services, law enforcement, advertisement and marketing and drug rehabilitation, etc. are showing high productivity increases. --- Savings rates are zero and actually were negative for six months in a row last year. The last time dissavings occurred was in '98 and before that it had never shown up since the early years of the Great Depression. In sharp contrast, savings rates around the world range from 40 percent in China to 11 percent or more in most of the EU economies. This does not indicate relative wealth accumulation by Americans. ---Family/household net worth, an extremely important statistic, has not been growing for many decades relative to inflation. In fact, the ratio of family net worth to income since the fifties has worsened, oddly enough, in spite of the fact that a higher percentage of families have two breadwinners working more hours per year. Their combined incomes, had savings not collapsed, should have allowed a rising net worth to forge ahead of inflation. This contrasts severely with more positive equivalent statistics in other economies, indicating that their people are getting wealthier in spite of working less and having far fewer resources. It may also show, in competing economies, wealth accumulation across generations, which does not occur in an economy characterized too much by slum houses and trailer homes that do not store wealth. ---War costs, historically, fall due at the end of a war or in the post-war period. Nobel economist Joseph Stiglitz recently estimated total direct and indirect costs for the Iraq war to be an unbelievable 2 trillion dollars. It is doubtful that Bush will mention war costs in his State of the Union speech. During the Vietnam war, the U.S. economy, compared to others, was far wealthier. It had a massive trade surplus, was not the world's largest debtor economy, suffered no major outsourcing and had far higher personal incomes. In 1991, the first Gulf War, moreover, was totally paid for by foreign governments. All of this has changed dramatically. The war costs, on top of the huge trade and current account deficits and growing federal budget deficits, on balance, guarantee a continuing decline in relative living standards. Essentially, labor mobility and flexibility, much touted by Bush and advisors, are being used, if not abused, by corporations for their interests and not for the well-being of the masses. Corporate mobility, flexibility and adaptability to serve the genuine interests and wealth accumulation of the people should be the objective and not the reverse. Moreover, innovative credit and financial institutions and policies, also much touted by Bush and advisors, have indebted the masses with credit card debts and inflicted billions of losses by Wall Street that have, after six years, not yet recovered. They socialized the burdens while privatizing the profits for the few whose corruption remains unabated. Both, labor mobility and innovative financial, investment and credit policies, have been active for many decades but have produced no major contribution to the wealth of most Americans. Had they done so, real net worth and the dollar would have risen. For, in economic history, all economies whose people became wealthier have always had a rising and strengthening currency--an unlikely prospect in the foreseeable future for an increasingly teeter tottering dollar.